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Executive Triplett proposes fixes for Metro budget deficit
Summary
King County Executive Kurt Triplett has proposed fixes for the Metro budget shortfall that preserve critical services and shares the impacts of service cuts throughout the region.
In order to save critical existing Metro Transit service, this comprehensive financial plan addresses the transit budget deficit over a 4-year period by combining the use of reserves with fare increases, deferred expansion, efficiencies and, unfortunately, service reductions.
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This comprehensive financial plan addresses the transit budget deficit over a 4-year period and saves critical existing Metro Transit service by combining the use of reserves with fare increases, deferred expansion, efficiencies and service reductions. This approach preserves the bulk of the region’s bus service by maintaining nearly all existing routes and reducing service proportionally across the entire system, thus sharing the burden and avoiding an unproductive regional fight over service impacts. The proposed solution also protects King County’s existing investment in Metro Transit while continuing to provide reliable, safe and affordable public transportation.
“If sub-regions try to create winners, the transit riders will be the losers,” said Executive Triplett. “We can and must do better.”
Currently, Metro’s largest source of revenue is receipts from the nine-tenths-of-a-cent sales tax. Because of the global economic downturn, that revenue stream is down dramatically. The result is a projected $213 million transit fund deficit for the 2010/2011 biennium. In addition, economic models project Metro Transit’s sales tax revenue will not return to even 2008 levels until 2014.
So, the big picture view of what Metro Transit faces is not a short-term, two year problem that can be solved with stop gap measures, but at least a $500 million deficit over the next four years that continues to grow beyond that time frame.
Executive Triplett’s initial efforts to erase that deficit, balance the budget and preserve as much service as possible began two weeks ago with the announcement of two pieces of a proposal to fix the transit budget deficit: 1) a proposed property tax for Metro at no new cost to taxpayers achieved by re-prioritizing transportation dollars now spent on passenger ferries to buses, and 2) deferring planned Transit Now expansion (with the exception of the RapidRide program and already-approved Service Partnerships).
Those are parts 1 and 4 of a comprehensive 9-point budget action plan which calls for:
Action 1 – Deferred bus service expansion by first scaling back growth with the exception of the RapidRide program and already-approved Service Partnership agreements. The revenue gap assumes growth in bus service, primarily associated with the implementation of Transit Now. Delaying that expansion closes the gap. This effectively leverages funding from other agencies and saves $36 million over the next four years.
Action 2 – Substantially cutting the capital program by re-prioritizing the Metro Transit capital program, mainly by purchasing fewer buses. With service cuts and delayed expansion we need fewer investments. This saves $83 million over the next four years.
Action 3 – Non-service related cuts. My plan calls for reducing programs not associated with “basic service” by roughly 10%. Programs include reorganizations and efficiencies, fewer new transit police, eliminating of much of our printed materials, reductions in customer service and park and ride landscaping, and increased cleaning cycles for buses. These were selected in a way that allows Metro to minimize impacts to its service and save $27 million over the next four years.
Action 4 – Raising new revenue through a property tax swap. As announced two weeks ago, by re-prioritizing transportation dollars now spent on passenger ferries to buses by using 5.5 cents of the new property tax authority granted by the 2009 legislature.
By law, the first 1 cent of this must be dedicated to expanded bus service across SR 520 while the remaining 4.5 cents will be used to preserve planned new RapidRide service around the county. This would be offset by rolling back 4.5 cents of the Ferry District levy and 1 cent of the AFIS levy. The 5.5 cent new property tax levy for Metro would raise $58 million over the next four years.
More importantly, using the property tax in this way will create dedicated, sustainable service for more than 16 million riders annually on crucial transportation corridors that link our urban centers and jobs.
Action 5 – Tapping into operating reserves to help stabilize service levels. Current county financial policies call for maintaining a 30-day operating reserve of $50 million. While some reserves are needed, it makes little sense to be adding money to reserves while cutting service. During this financial emergency, lowering this amount to roughly two weeks of operating reserves will help in 2009 and beyond by stabilizing service levels and offseting additional fare increases, freeing up $40 million over the next four years.
Action 6 – Increasing fares by 25 cents in 2011. Bus riders must also be part of the solution. This increase is in addition to an already planned 25-cent fare increase in 2010 and recent increases in 2008 and 2009. This will improve our estimated operating-revenue to operating-expense ratio to 28 percent. It is also a more modest approach to increasing fares than the council has proposed, and is intended to balance cost recovery with affordability to transit riders rather than driving them away when they need transit most. This will result in $35 million more in net revenue over the next four years.
Action 7 – Using fleet replacement reserves to help stabilize the revenue base and significantly help with the deficit during this crisis. Using the one-time excess fleet replacement reserves recently identified by the county auditor and spending them over the next four years will save $100 million over next four years to support existing service levels.
Action 8 – Implementing operating efficiencies from the forthcoming transit performance audit recommendations. There is a Metro performance audit currently underway that is likely to identify operating efficiencies that the auditor and Metro staff believe will help the agency achieve some of the efficiencies indicated, particularly in how service is planned and scheduled. To the extent Metro can achieve these efficiencies over the next few years, these savings are likely to offset or “buy back” a portion of the anticipated service reductions. However it is premature to assign a dollar savings to these efficiencies today.
Action 9 – And the final and most difficult action: reducing bus service. Despite all the actions outlined above, there is still a remaining deficit of about $30 million over the biennium and $90 million over the next four years. This amount equates to a bus system that will need to shrink by 310,000 hours of annual service over the next two years or roughly 9% of the overall bus system.
In an effort to avoid an unproductive regional transit fight, Executive Triplett’s proposal treats these service reductions as “suspensions” rather than permanent “cuts” so that the service hours can be restored to each affected sub-area when it becomes affordable to do so.
This approach and the comprehensive steps outlined are aimed at avoiding a “winners versus losers” approach to regional transit service allocation and instead focusing attention on the need for regional service areas to share as equally as possible the difficult burden of reducing transit service at a time when cash-strapped residents and the regional economy needs it most.
“These are extraordinary times, and these are extraordinary circumstances for King County and our world-class transit system,” said Executive Triplett. “But I believe this plan takes a balanced and comprehensive approach to addressing this crisis with fiscally sound, sustainable financial practices that preserve as much service as possible over the near and long-term.”
To get King County farther down the road to fiscal sustainability, implementation of this plan not only depends on help and support from the region and the county council, but also depends on forming a partnership with the state and federal governments to seek a longer-term solution to address King County’s volatile sales tax revenue base.
The proposed policy changes will be coordinated with the transit budget proposal and submitted to the Regional Transit Committee and county council for consideration.
